Jason Chen's sloppy iPhone breakdown damaged the prototype and may have added vandalism to the list of pending charges against him and other Gizmodo staffers. (Source: Gawker Assets)

Vandalism and sale of trade secrets are two of the top charges that may be leveled against Gizmodo's staff

Gizmodo/Gawker
employees Brian
Lam and Jason
Chen are embroiled in a mess over the fourth generation
iPhone that they purchased and then tore apart. Lam and Chen
contend that the iPhone was merely lost and that they are innocent.
Apple, however reported the phone stolen.

Documents concerning
the case and the search
of Chen's house have been released in the form of an
affidavit pertaining to the search of Chen's home. The
damning summary of the case comes on page 12, which reads:

Suspect
Brian Hogan found or stole a prototype iPhone 4G that was
accidentally left at a restaurant by Apple employee Robert "Gray"
Powell. Hogan identified the owner of the phone as Apple Engineer
Gray Powell through the contents of the phone and through Internet
searches. Rather than return the prototype phone to Powell and/or
Apple, Hogan subsequently sold the iPhone Jason Chen in Fremont for
$5000. Upon receiving the stolen property, Chen disassembled the
iPhone, thereby causing it to be damaged. Chen created copies of the
iPhone prototype in the form of digital images and video, which were
subsequently published on the Internet based magazine Gizmodo.com.

It's
will be mighty hard for Gizmodo to dispute that,
except perhaps for the phone's status being stolen. However,
Apple had reported the lost phone prototype stolen
before Gizmodo found it.

Gizmodo's
writers appear to have not been truthful about at least one
significant detail of the incident. In their coverage they
claimed they bought the prototype for $5,000. According to
multiple accounts the real total was close to $10,000.
Detective Matthew Broad describes in the affidavit an interview with
Katherine Martinson, roommate of Brian Hogan, the man who found and
sold the phone:

Martinson
said Hogan later showed her a camera box that contained $5000.00 in
$100 US Treasury Notes. Hogan told her that the money was a result of
selling the phone to Jason Chen. Martinson said Hogan told her he
has received a total of $8500.00 the sale of the
phone, but she is not sure of the source of the additional $2500.00.
Martinson said Hogan also told her that he will receive a cash bonus
from Gizmodo.com in July if and when Apple makes an official product
announcement regarding the new iPhone.

(Note:
There seem to be some discrepancies in Detective Broad's numbers, he
probably meant $5,000 and $7,500; not $5,000 and $8,500. The
take home message, though, appears to be that Gizmodo paid more than
the $5,000 they claimed.)

The affidavit also reveals:

Martinson
said she and other friends attempted to talk Hogan out of selling the
iPhone prototype on the basis that the sale would ruin the career of
Robert "Gray" Powell (Apple engineer who lost the
phone). Hogan's response to her was that it, "Sucks for
him. He lost his phone. Shouldn't have lost his phone."

It
also reveals that Hogan had an accomplice -- his roommate Thomas
Warner. Warner, who has a misdemeanor history, helped Hogan try
to destroy evidence of the phone. States the report:

Based
upon the fact that Warner directly assisted Hogan with the removal
and concealment of evidence directly related to this case, I believe
it is highly likely that Warner was involved and or conspired with
Hogan in the negotiation and subsequent sale of the prototype iPhone
and that his efforts to conceal and or destroy the evidence
as an indication of his consciousness of guilt. I also know that
cellular devices like BlackBerries and iPhones function as small
computing devices and that they maintain large quantities of data
which include, but are not limited to call logs, email
communications, system logs, GPS logs, text messages, applications,
and Internet browsing history. Additionally, based upon my training
and experience, I know that continued use of the devices can result
in the deletion of data and or potential evidence on the phone.
Therefore, I seized the items as evidence.

Unfortunately,
Warner and Hogan's attempts to hide or destroy the evidence were
largely for naught, as the pair apparently had a change of heart and
directed police to the evidence they had ditched. The ditched
items include stickers that identify the phone as an Apple prototype,
a camera memory card, a USB memory stick, and a computer.

The
affidavit also contains part of the email exchange between Brian Lam
and Steve Jobs, in which Lam demands a letter of authenticity for the
phone's safe return. Jobs complied with the demand, according
to the affidavit.

The affidavit indicates that Chen and/or
others at Gizmodo will
likely be charged with receiving stolen property, vandalizing private
property, and sale of trade secrets. Even if they can escape
the claim that they bought stolen property, they will be particularly
hard pressed to fight the vandalism charge, as it is obvious they
damaged the expensive prototype.

The seller Hogan may be
charged with felony theft and or sale of trade secrets as well.
And his friend Warner may be charged as an accomplice to these
actions They may find it hard to prove their innocence, given
the fact that they tried to destroy evidence of their actions.

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Who pays 10G for a phone. I'll tell you someone who knew the phones value to Apple and had blackmail on the mind. Then they got scared and pointed the police to the evidence and thought they would buy some leniency. Too late for that idiots, you posted the pics online. China will have a working unit for sale before Apple's phone gets to the AT&T outlets.

Yes, of course looking at some chips is all you need to make a knockoff. So far the only crime that has been committed has been Hogan's selling the phone and trying to destroy evidence with his friend. Technically when they sold it they stole the device but NOT until then. You clearly have no idea how the press works hundreds of dollars can be given for even a sniff of an exclusive, a few grand will be more than made on the hits from a story of a real prototype, a knockoff before the release of the real thing or Apple being caught leaking the device. Remember the device went missing a month before the police were called in, that's how valuable the device appears to be. They bricked it the next day so it appears the software was more important. They only called the police when the HTC phone was being released a month later to steal some headlines and quite possible to harass Gizmodo.